Friday, 13 April, 2012 16:11
Written by Tricia LaMotte
What’s happening in the Santa Clarita Valley housing market right now?
Real estate return on investment
The hot market right now is the purchase of rental homes by “Mom and Pop” investors, and to a lesser degree, vacation homes. Rentals will continue well into the future and at some point the market will come back and those rental properties will increase in value and equity – how long will that take is anybodies’ guess – all depends on the economy – but a few years anyway.
Interest rates are still low and the FED chairman has said that he wants to keep them there but for how long? Many think that nothing much will change until after the election, so the rest of this year should remain about the same – after that they could spike or climb gradually – but they are sure to increase. – Many of us remember the 80’s and the 18 – 20% interest rates which seem unbelievable to us today – I’m certainly not predicting anything like that, but remember, even an increase of a couple of percentage points of interest could mean thousands of dollars a month more in mortgage payments – those numbers will vary with the agreed sales price, the amount of down payment, the type of loan and the interest required, but if you’re planning to acquire a rental property you have to do all the math to invest wisely.
If you plan to buy a house to rent out, there are some other things to think about also: The greater the down payment you make – the less you will owe – the lower your monthly payment – the less you will have to recoup through monthly rent charged. That’s important to consider because the end of the year and the election will change a couple of very important things – Taxes will change. Should the ‘Bush Tax Cuts’ expire as they’re slated to and the ‘Employee share tax’ expire, many people, renters included will have less income with which to pay rents, squeezing family budgets – the less money you really have to charge in rent will help you to be more competitive – Also, the Government (Fannie – Freddie) plans to ‘Wholesale’ large inventory packages of Foreclosed Homes to institutional Investors, taking a lot of properties off the market.
Buying a Santa Clarita home for a long term rental:
Many people feel like this is a good time to look into purchasing a property for long-term rental purposes.
8 things to remember when buying Santa Clarita real estate:
1. Find an area that people want to live (good schools – transportation – shopping – etc.). Santa Clarita certainly fits this criteria.
Search for all listings in Santa Clarita Valley under $350,000
2. Traditionally the 3 Bedroom/2 Bathroom house is the preferred – but not always.
Search for 3 bedroom 2 bath homes in Santa Clarita Valley
3. Look for a property that suits your budget – and compare with local rent schedules (will you be able to cover your mortgage payments).
4. Balance the age of the property against repairs and future realistic increase in value. (Many investors only look at property 10 years old and newer.) Santa Clarita has a number of properties that match this criteria.
5. Have a thorough inspection.
6. If it’s a ‘Fixer-upper’ – get a contractor you trust to give you a bid.
7. Do the Math! – don’t kid yourself.
8. Most important – get a good Real Estate Agent that will help you through the process and can give you realistic information about areas, prices, lenders, and do other things pertinent to your endeavor – like negotiate on your behalf with Banks and other Agents. Interview more than one; ask about their related business contacts, their knowledge of the area you’re interested in and their business certifications. Tricia La Motte has a number of real certifications which include: Certified Residential Specialist, Certified Negotiation Expert, Certified Investor Agent Specialist, Certified Short Sale Specialist, Graduate of Realtor Institute, and is a co-author of the soon to be published book The New Masters of Real Estate
For more information about the Santa Clarita California real estate market, contact Tricia La Motte
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